ESPN dragging down Disney's profits?

[LVT]

I just read an article about ESPN is starting to cost Disney a lot of money. As cable TV dies so does ESPN's profit.
Does anyone have any input on this? I wondered if that plays into the "cuts" mentioned on another thread. Attendance still seems to go up around 4% per year.
So is the TV part of Disney supporting the parks?

[dnickels]

I just read an article about ESPN is starting to cost Disney a lot of money. As cable TV dies so does ESPN's profit.
Does anyone have any input on this? I wondered if that plays into the "cuts" mentioned on another thread. Attendance still seems to go up around 4% per year.
So is the TV part of Disney supporting the parks?

ESPN isn't costing them money yet, but the amount of money Disney makes from ESPN is slowing and will likely decrease. The reason Disney stock has done so well over the past 5 years or so is largely driven by increasing profits at ESPN. As you noted, as cable dies, subscriptions and profits at ESPN seem likely to decrease.

Disney the company actually derives most of its revenue an earnings from television, the theme parks are a much smaller part of the whole company than most of us realize.

Here are the numbers for the most recent quarter.
Total revenue 15.244 billion
Earnings 2.88 billion

Of that the theme parks and resorts provided 4.281 billion in revenues and 981 million in earnings so 28% of total revenue and 34% of total profits come from the theme park division.

Media Networks (television) provided 6.332 billion in revenues and 1.412 billion in earnings so 42% of total revenue and 49% of total profits come from the television networks.

The remainder of revenue and profits come the Studio division (Star Wars is giving a big bump to this division) and Consumer Products & interactive media.

As you can see, the theme parks really only provide about 1/4 to 1/3 of revenues and profits depending on how it and the various other segments are doing at a given time. Decreasing profitability in the media segment seems almost certain as more and more people cut the cable cord. Whether that will lead to cuts at the parks is anyone's guess.

[baldburke]

Disney should get on board and go D2C just like CBS. Sure, CBS is still on cable but by offering a direct to consumer alternative they can make inroads as cable continues to decline. Now if only the networks could play ball with Amazon, Apple and Roku.

[Tekneek]

Disney should get on board and go D2C just like CBS. Sure, CBS is still on cable but by offering a direct to consumer alternative they can make inroads as cable continues to decline. Now if only the networks could play ball with Amazon, Apple and Roku.

Disney bundles with Sling TV, which is probably a more sustainable play in the long term than CBS trying to convince people to pay $5.99 just for their stuff. HBO Go would probably look cheap compared to what Disney would have to charge people.

[LVT]

Thank you. It sounds like the parks should be around a while yet.